CannTrust shares sink after violations found at second facility

Health Canada has found fault with cannabis production at a second CannTrust Holdings Inc facility, a month after the regulator froze sales of several tons of marijuana grown at another one of its Ontario operations.

Cannabis plant.

Pablo Porciuncula, AFP/File

CannTrust shares plummeted 26 percent on Monday after receiving a report from Health Canada that its facility in Vaughan, Ontario is noncompliant with certain government regulations.

The Ontario cannabis company is already in trouble with Health Canada over a regulatory breach discovered in June at its manufacturing facility in Pelham, Ontario. The company allegedly hid thousands of pot plants behind temporary walls in order to stage photographs of an unlicensed growing room.

The Pelham problem led to the firing of Chief Executive Officer Peter Aceto, a halt on all sales and shipments of CannTrust products, and a joint investigation by securities regulators and police.

At the time, CannTrust issued a statement saying: "CannTrust is working closely with the regulator through the review process and expects to provide further detail of the duration of the hold and other developments as they become available.”

Vaughan facility problems

BNN Bloomberg is reporting that Health Canada found a virtual laundry list of violations, including:

* Five rooms converted from operational areas to storage without prior approval; these were used for storage since June 2018

* Two new areas were constructed without Health Canada approval, one of which was used to store pot since November

* Documents or information were not retained in a way that would enable Health Canada to complete its audit in a timely matter

“As previously announced, the company implemented a voluntary hold on the sale and shipment of all cannabis products while Health Canada reviewed its Vaughan, Ontario manufacturing facility,” the company said in a statement, and reported by Market Watch. “CannTrust continues to work closely with Health Canada and will provide further details of the hold and other developments as they become available.”